Merely Extending Financial Assistance Can't Be Considered As Loan In Absence Of A Loan Agreement: NCLT Delhi

The NCLT Delhi has ruled that merely extending financial assistance cannot be considered a loan in the absence of a formal loan agreement. This decision emphasizes the importance of proper documentation to establish the nature of financial transactions, particularly when seeking to initiate insolvency proceedings based on a "financial debt." The tribunal clarified that without a clear loan agreement outlining terms like interest, repayment schedule, and consideration for the time value of money, an advance or payment may not qualify as a financial debt under the IBC. This ruling highlights the need for clear contractual agreements in financial dealings.